A Forward Contract

question 121

Multiple Choice

A forward contract

• A)has more credit risk than a futures contract.
• B)is more standardized than a futures contract.
• C)is marked to market more frequently than a futures contract.
• D)has a shorter time to delivery than a futures contract.
• E)is less risky than a futures contract.

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Definitions:

Consolidation

The act of combining multiple entities, assets, or processes into a single, more effective and efficient unit.

Short-form Merger

A method of merger where a parent company merges with a subsidiary and doesn't require approval from the subsidiary's shareholders.

Parent Corporation

A company that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors.

Subsidiary's Stock

Shares of ownership in a company which is controlled by another firm, where the controlling firm owns more than 50% of the subsidiary's stock.